Digital SaaS (Software as a Service) platforms have been the catalyst for several major disruptions, and they have also been gaining substantial ground in the world of finance.
SaaS is an on-demand service model that has led to major disruptions in the software marketplace, and FaaS is the result of SaaS finally reaching the finance sector. FaaS’s blend of professional finance experts along with an enterprise-level finance and accounting software stack including a single sign-on engagement layer is the one to watch.
However, who can benefit the most from Finance as a Service? Are in-house finance departments and legacy infrastructure solutions about to go extinct? In-house finance teams come with their own sets of advantages and disadvantages but small businesses can keep finances running with QuickBooks and other small business accounting systems. On the other hand, high-growth and investor-backed businesses that need more sophistication and expertise in terms of their financial needs can leverage the FaaS model because it is easy to deploy, cost-effective, and can scale up easily as the company grows and changes.
When You Should Consider Using Finance as a Service
For many companies, the finance and accounting functions are typically managed behind the scenes and aren’t linked to their customer experience or business’ core competency. When performed well, the finance and accounting functions contribute significantly to a company’s operational performance. However, the time spent on them internally could be out of balance to the value it brings. Oftentimes, the current professionals may not have the expertise needed to support their company’s business goals.
One of the ways to enhance your resources, increase financial visibility, or help your finance function quickly adopt automation (by removing the need to deal with daily, repetitive tasks) is Finance as a Service. For example, imagine a high-growth company that has just taken an investor round, but only has one employee overseeing all the accounting work and paying the bills but doesn’t provide consistent financial reporting. The startup owner doesn’t have a clear picture of their cash position, burn rate, and critical KPIs that companies need to know such as Committed Monthly Recurring Revenue (CMRR), Customer Acquisition Cost (CAC) and more. Ultimately, stakeholders do not have the data they need to make decisions for the business. In that case, letting an accountant and controller keep track of finance once per week would provide the needed insight to help the company grow. Also, the company can rely on FaaS service for automated data collection and analytics.
By leveraging the services of FaaS, company owners and employees will be able to focus on the daily running of the business, while benefiting from the features of a cloud-based FaaS solution. Finance as a Service is right for your company if you’re dealing with challenges, such as:
- Having a small staff with no or limited qualifications
- Having limited budgets and no room for technology upgrades
- Not being able to recognize revenue properly
- Not being able to report or track revenue sources
- Not able to adhere to a 10-day close
- Not being able to pass an audit
- The finance lead or CFO is being sidetracked by day-to-day finance & accounting tasks
What Companies Get When Subscribed to Finance as a Service?
1. Getting access to the latest technology and experts
Finance as a Service involves using a cloud-based consolidated platform that provides single sign-on access to the most enterprise-level finance & accounting software and professional expertise. Immagine having all of your finance & operational metrics aggregated in place.
You can forget about continually investing in software upgrades. All this is done by the FaaS partner.
Meeting compliance deadlines
*** We are not CPAa and do not file tax returns for our clients so I had to delete
2. Reducing errors
Detecting and resolving errors can be very time-consuming and expensive when performed manually by an in-house finance department. This is very typical with small businesses who are working with multiple systems that are not integrated. Oftentimes, they are pulling information from various systems and then bringing the information into excel spreadsheets. On the other hand, the FaaS model is automated and has multiple layers of review built into their processes, which is an advantage that allows detecting most errors and discrepancies on time.
3. Improved accuracy
In your company’s early stages, you may have been able to use paper-based processes to support the business. But in a growing company, this reduces accuracy (due to human error), decreases efficiency, and makes room for errors and fraud. Thanks to integrated financial management systems, your team can concentrate on doing productive and profitable work instead of dealing with repetitive administrative work, and their work can be monitored via the FaaS platform.
4. Provision of important reports to assist decision-making
Financial information collected from across the business is oftentimes disparate, and it needs to be presented in a unified form. FaaS applications can support financial reporting, making the data make sense of all the current opportunities and challenges ahead. It can help you monitor Customer Acquisition Costs (CAC) and track account profitability, understand your cash position, evaluate service performance, and demonstrate the company’s performance gains to potential investors.
This is especially relevant for business owners and CEOs who are not that finance-savvy but still need a solid foundation of financial reporting to make the best data-driven decisions. Such analytics may not be readily accessed from within the business.
5. Saving invaluable time
Growing businesses often have underdeveloped teams that lack the most valuable asset – time. By automating some of your finance functions, your team will have more time to focus on value-added revenue-generating tasks and providing the best customer service. Manually collecting and processing data and complying with accounting rules will be a concern of the past.
Finance as a Service is the right solution for your company if you:
- Don’t have the numbers. The first and most obvious indicator that you should evaluate the FaaS service model is not having the numbers you need in order to make decisions regarding your company growth. Therefore, it’s time to rely on automation and detailed reporting that a FaaS solution can provide. It is challenging when your company’s financial situation is nothing more than a question mark, so spending time on evaluating quality analytics is the first step to taking control over your cash flow.
- You have the numbers but cannot interpret anything from them. Keeping track of your accounts and collecting information means nothing if you don’t know what the numbers are actually telling you. If you are not skilled enough to interpret the data and are not sure how to do it, it’s a good idea to take advantage of Finance as a Service because it delivers integrated technology as a platform, data analysis expertise, business process engineers, and high-level strategic CFO guidance. Whatever your numbers are, a finance expert will be able to read into them, or you will have the numbers presented in a way that you can make sense of them.
- Don’t have the time to build an in-house finance department. Startups and small businesses could probably hire a single person to deal with their financial matters successfully. However, as you make progress and the complexity of the business grows, you will need more systems and processes. That requires someone to research and architect the systems, refine & map processes to systems, integrate and train users, configure data, move and test data. This typically takes 12-18 months to build in-house. When you handle your finance department in-house, staff scalability also becomes difficult with increasing transactions. With FaaS, your staff can handle higher transaction volumes in the same amount of time, enabling you to scale your business and finance function quickly and easily.
- Are spending too much time on accounting tasks. Yes, you can have a full in-house team and manage the people, processes and systems yourself. However, there are ways to perform the same work more efficiently and accurately and, eventually, get better insights. If you are spending too much of your precious time on accounting details, Finance as a Service can help you free up much of it.
Consero and Finance as a Service
Consero provides a robust financial solution that helps finance management teams, investors, CEOs, and CFOs get a clearer financial picture required for making better business decisions. Our team doesn’t just provide a piece of software that you can use to improve your company’s financial visibility, but learn about your core business needs, implements systems, plugs into a unified financial console with a management dashboard, develops performance metrics, and supports your finance with a live team of professionals to manage daily finance tasks.
SIMPL is our cloud-based financial console that provides real-time data in order to communicate your company’s financial health to both financial and non-financial executives. It can scale along as your company grows, without any added complexity.
In case your company wants additional CFO financial guidance and support, our experienced financial leaders work alongside your team to give you and other stakeholders clarity on the drivers of the financial performance of your business today. Our team is there to learn more about your business, gain a complete picture of it, and then give expert advice and financial direction.